Fuel prices nudge up key US in­fla­tion in­dex

Kuwait Times - - Business -

WASH­ING­TON: A record spike in fuel prices fol­low­ing the sum­mer’s back-to-back hur­ri­canes drove up a closely watched US in­fla­tion mea­sure in Septem­ber, but the un­der­ly­ing trend re­mained weak, ac­cord­ing to new data yes­ter­day. The new fig­ures come as the Fed­eral Re­serve pre­pares to be­gin a two-day meet­ing to­day, with pol­i­cy­mak­ers widely ex­pected to leave bench­mark in­ter­est rates un­touched but to raise them in De­cem­ber. Dis­agree­ments among pol­i­cy­mak­ers about the tim­ing and pace of rate hikes were un­likely to sub­side in the face of a fresh batch of weak in­fla­tion num­bers for Septem­ber. But ro­bust spend­ing fig­ures in the data re­port pointed to con­tin­u­ing eco­nomic ex­pan­sion. The Per­sonal Con­sump­tion Ex­pen­di­tures price in­dex rose 0.4 per­cent for the month, up two tenths from Au­gust and in line with an­a­lyst ex­pec­ta­tions, ac­cord­ing to the Com­merce Depart­ment re­port.

The in­crease was driven al­most en­tirely by a 6.8 per­cent spike in the costs of gaso­line, elec­tric­ity, nat­u­ral gas and sim­i­lar en­ergy goods and ser­vices-the largest monthly jump in the en­ergy in­dex in more than eight years. But when volatile food and fuel costs are ex­cluded, the “core” PCE in­dex rose only 0.1 per­cent for the month, the same level now recorded for five months in a row.

On a 12-month ba­sis, the in­dex grew 1.6 per­cent, up two tenths from Au­gust, but the core in­dex held steady at 1.3 per­cent, the same as in Au­gust and no higher than in Oc­to­ber 2015.

Core an­nual PCE has held be­low the Fed’s two per­cent tar­get with­out in­ter­rup­tion for more than five years. Com­merce Depart­ment of­fi­cials said hur­ri­canes Har­vey and Irma af­fected con­sumer spend­ing, but they were un­able to iso­late the ef­fects given how the un­der­ly­ing data were col­lected. Per­sis­tently low in­fla­tion has be­dev­iled pol­i­cy­mak­ers dur­ing much of 2017, with Fed chair Janet Yellen de­scrib­ing the low price pres­sures al­ter­nately as a “mys­tery,” a “sur­prise” and a “con­cern.” Mean­while, per­sonal in­comes rose $66.9 bil­lion for the month as post-hur­ri­cane con­sumer spend­ing gained a full per­cent­age point to reach $136 bil­lion, the largest monthly in­crease since Au­gust 2009, on sales of durable goods like cars. — Agen­cies

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